Lending in niche areas such as new build is making a comeback, but is buy-to-let being left behind?

By Mollie Millman

With niche lending becoming more and more common, mysteriously buy-to-let stil faces many of the same restrictions.

The rise of new build mortage lending

During the last economic downturn, so-called niche lending sectors such as new build and buy-to-let were often perceived to be pushed
aside by banks and building societies in favour of allegedly lower risk mainstream residential areas.

In particular, the best rates were seen to be saved for those with a large deposit and a good credit score with an uncomplicated purchase
of a ‘normal’ property.

Fast-forward almost a decade since the credit crisis and subsequent recession and lenders are not only lending in many of these areas,
but actively offering bumper deals.

Residential mortgage lending still favoured

However, they seem to be favouring residential lending in areas such as new build and retirement while continuing to place many
restrictions on the area of buy-to-let.

For example, for several years now Help to Buy has not only been running but has flourishing as it continues to grow and expand, with
more generous versions such as Help to Buy London being introduced. Such schemes can provide interest-free loans of up hundreds of
thousands of pounds - something that would seem inconceivable during the credit crisis when mortgages were much harder to come by.

The Government has also launched Starter Homes, offering large discounts to first-time buyers under the age of 40.

And then, in one of the biggest moves yet towards the lending of old, 100 per cent mortgages have been reintroduced.

Buy-to-let lending restrictions

But while all these changes have been occurring in the new build and residential markets, it could be argued that buy-to-let seems to be
largely untouched.

Indeed, lending seems to be getting more difficult in the buy-to-let arena with many lenders introducing higher rental cover requirements
in recent weeks. These is where investors have to earn sufficient rent so that it more than covers the repayments on their buy-to-let
mortgages.

At the same time, deposits required by lenders have barely moved, with most banks and building societies still requiring 20 per cent or
25 per cent.

Some may argue it is inconsistent that some niche areas have been expanded while others, such as buy-to-let, have not.

A tactic to win votes?

However, it could be suggested that it may be more to do with the Government wanting to win votes to stay in power with first-time buyers
being a more popular target audience than property investors.

Whatever the reason, there needs to be a more level playing field across the sectors as buy-to-let is an integral part of the housing
market - and without the ability to secure buy-to-let mortgages and invest in property we will all be worse off.

Have you found it difficult to lend for buy-to-let property? Let us know in the comments below.

Get set with tailored landlord cover

Over 100,000 UK landlord policies, a 9/10 customer rating and claims handled by an award-winning team. Looking to switch or start a new policy? Run a quick landlord insurance quote today.